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Americas

Court to sentence Madoff over investment fraud

Video by Sarah DRURY

Text by NEWS WIRES

Latest update : 2009-06-29

Fraudulent financier Bernard Madoff will hear on Monday the prison term he is sentenced to for having tricked his clients out of an estimated $61 billion. Prosecutors have asked for 150 years, "the maximum punishment allowed by law".

REUTERS - Bernard Madoff, who became a symbol of greed in the financial crisis for masterminding Wall Street's biggest investment fraud, faces the rest of his life in prison in one of the stiffest punishments for white-collar crime when he is sentenced on Monday.

 

The courtroom drama will unfold with the swindler hearing angry defrauded investors speak of their financial ruin. As he makes what could be his final appearance in public, Madoff, 71, will read a statement before a judge hands down a decision.

 

"Mr. Madoff has been very stone-faced throughout the whole process. He doesn't seem to have a lot of remorse," said Anthony Sabino, professor of law and business at St. John's University in New York. "To date, he has refused to implicate anyone else."

 

More than six months after Madoff's arrest, U.S. prosecutors remain uncertain how much was involved -- such was the complexity of the financial web he wove around the world to operate his Ponzi scheme.

 

In a Ponzi scheme early investors are paid with money from new clients.

 

About 1,341 account holders lost about $13 billion in the classic "cash in, cash out" fraud, according to court papers. They also say $170 billion flowed through Madoff's principal account over decades and last November, Madoff claimed accounts held nearly $65 billion, when in fact he had never traded any securities, investigators said.

 

Madoff, a former nonexecutive chairman of the Nasdaq stock market, pleaded guilty in March to 11 charges, including securities fraud, money laundering and perjury that carry a combined maximum sentence of 150 years. The only other person charged so far is his outside accountant.

 
LIFE TERM SOUGHT
 

"It is unlikely that he will come back out," Jayne Barnard, a law professor at the College of William & Mary in Williamsburg, Virginia, said, echoing the view of several legal experts on the likely sentence for an audacious scheme.

 

U.S. prosecutors argued in court papers on Friday that sentencing Judge Denny Chin should make sure Madoff spends the rest of his life in prison because of the "unique scope and duration" of his crimes.

 

"Madoff's crimes were the product of a series of decisions made over the course of years, and it was within his power to stop his crimes at any point in time," the government said ahead of the 10 a.m. EDT (1400 GMT) proceeding in Manhattan federal court.

 

The arch thief and his wife of 45 years, Ruth Madoff, have been stripped of all their luxury homes and possessions. His wife is being allowed to keep $2.5 million in cash, according to an agreement with prosecutors.

 

Madoff's lawyer Ira Lee Sorkin asked the judge to impose a sentence of less than life, suggesting a 12-year term or 15 to 20 years as sufficient.

 

Victims have sent more than 100 letters to the judge, most demanding the maximum punishment allowed. They describe entire savings lost for several generations of families, mortgages unpaid and elderly people unable to pay for medical coverage.

 

Madoff's wife, two sons and his brother, who have all been the target of swindled investors' vitriol and suspicion, were not expected to attend the hearing. Since his arrest by the FBI in December, the gray-haired Madoff has made all of his court appearances alone, except for his lawyers.

 

The sentence could be one of the longest handed down in a corporate crime case since a string of scandals this decade.

 

Among the heftiest punishments were a 25-year term for Former WorldCom Chief Executive Bernard Ebbers and 24 years for former Enron CEO Jeffrey Skilling. Skilling is set to be resentenced next month.

 

A stock trader of modest origins from the New York City borough of Queens, Madoff built his own firm and used personal connections to orchestrate his investment scheme. His seemingly consistently high returns attracted thousands of customers from all walks of life.

 

The fraud was missed by U.S. Securities and Exchange Commission regulators and led to calls for tighter oversight.

 

The SEC had "an investigations system not sufficiently sophisticated or in-depth to uncover the fraud," said George Jackson, an attorney with Bryan Cave LLP in Chicago and a former prosecutor.

 

"I would suggest that he can provide a wealth of information and more importantly how they missed it."

 

Jailed next door to the courthouse since his guilty plea, Madoff met for several hours recently with David Kotz, the inspector general of the SEC, but government court papers said it would not be helpful in terms of future regulation.

 

Kotz is examining the agency's handling of information over the years on Madoff and is due to publish a report in August.

 

 

Date created : 2009-06-29

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